Punch Taverns: trading has stabilised
Punch Taverns has reported that trading has stabilised in its leased and managed divisions.
The company has also repaid, in the first 35 weeks of its financial year, £318m of debt at a cost of £203m.
In total, the company has reduced 7% of its gross debt after disposing of £91m worth of pubs. However, Punch had losses of £122m following an exceptional charge of £184m — this included a £147m charge for pub impairments.
Ebitda (earnings before interest, tax, depreciation and amoritisation) in the leased division is down 11.3% at £227m. Punch reported that 5% of the leased estate is currently closed and tenant support is stable at £1.6m a month.
The rate of new lets is higher than at the same time last year although a greater proportion are on short-term agreements because "new entrants are less willing to sign-up to long-term agreements in the current climate".
Managed pubs
In the Spirit managed division like-for-like sales were down 0.9% compared to 2.5% for the first 20 weeks of the year. A total of £31m has been spent on capital investments including the introduction of new concepts.
A total of 50 pubs have reverted to Punch in the half year, of which 31 have resumed trading and 19 are closed pending sale — the company made a £22m onerous lease provision.
Chief executive Giles Thorley said: "Given the ongoing challenges in the external operating environment, I am pleased to report that we remain on track to meet our expectations for the financial year.
"While we have seen a modest improvement in our performance since the half year, the weak UK consumer environment is likely to persist throughout the remainder of the year.
"Consequently, we remain very cautious over near-term trading prospects and we will continue to focus on taking prudent steps to further strengthen our balance sheet.
"Punch Taverns' business is dependent on the sustainable future of the British pub.
"Despite the economic challenges, we have responded quickly to provide assistance to our licensees and to protect the future of as many of our pubs as possible."
Beer tie distraction
Thorley added: "During these challenging times we believe that arguments put forward by some that the beer tie is the cause of the problems facing the industry is a divisive, non-productive distraction from the core underlying issues and ignores the impact of the recession, tax and regulation on small businesses like pubs.
"We have made good progress in divesting of non-core assets and using the proceeds to pay down debt. While we continue to look at further opportunities to progress this strategy, we will only do so where such actions are accretive to earnings or are in the best interest of shareholders."
Fuller's sale
• Punch also announced today the sale of the Round House in Garrick Street, London to Fuller's for £3.3m. The deal for the Spirit managed pub is expected to be completed by 14 May and follows the sales of six other London pubs to Fuller's for £2.1m earlier this month. The Round House generated earnings before interest and tax of £0.4m for the year to 23 August 2008 and had a book value of £3.4m on 7 March 2009.
